Union Bank and Yes Bank to join Bank Nifty, NSE tweaks Bank Nifty and Fin Nifty methodology

Union Bank and Yes Bank to join Bank Nifty, NSE tweaks Nifty Bank and Financial Services methodology

NSE Indices Limited on Monday announced revisions to the methodology of the Bank Nifty and Nifty Financial Services indices to align with SEBI’s circular for enhanced eligibility criteria for indices traded in the derivatives segment, aimed at improving trading convenience and strengthening risk monitoring. In line with the revised criteria, Union Bank of India and Yes Bank will be added to the Bank Nifty index effective December 31, 2025. Inclusion of these stocks in Bank Nifty will not only increase visibility of the stocks but also provide more liquidity and investment flows. For investors, the new inclusion will add to diversification. Inclusion of more stocks will also ensure that indices are not manipulated due to concentration of weightage in select stocks.

Under the revised framework, the Nifty Financial Services index will introduce tighter weight caps, including individual limits of 19 percent, 14 percent and 10 percent for the top three stocks, and new restrictions on non-F&O stocks, which will now be capped at 4.5 percent individually and 10 percent cumulatively.

Currently, HDFC Bank leads with a 27.65 percent weight in the index, followed by ICICI Bank at 23 percent, while SBI, Axis Bank and Kotak Mahindra Bank hold 9.43 percent, 9.10 percent and 8.75 percent respectively; Federal Bank, IndusInd Bank, AU Small Finance Bank, Bank of Baroda and Canara Bank make up the remaining positions with weights ranging from 3.77 percent to 3.04 percent.

The Bank Nifty index will expand to 14 stocks instead of existing 12 and new methodology will reduce the weightage of top stocks to accommodate the new stocks.

There will be a two-step selection process prioritising F&O-traded stocks, introduce circuit-filter based eligibility for prospective inclusions, and apply a similar new capping structure mirroring the Financial Services index.

In step 1, top 14 stocks by six-month average free-float market cap from those already trading in NSE’s F&O segment will be picked up, if 14 such stocks exist, the selection ends here. In Step 2 if less than 14 stocks qualify in Step 1, the remaining spots will be filled with the next highest free-float market-cap stocks from the rest of the eligible universe. This ensures the index always has 14 stocks.

Implementation will occur in a single tranche for Nifty Financial Services on the last trading day of December 2025, while Bank Nifty will transition over four monthly tranches ending March 2026.

NSE Indices has also specified that treatment of demergers within Nifty equity indices, including provisions for retaining demerged companies when a Special Pre-Open Session is conducted and introducing dummy stocks for spun-off entities until their listing, with new rules governing the timing of their exclusion.

The demerger-related changes come into effect from December 15, 2025. NSE Indices.